USD/CAD Fundamental Analysis – October 20, 2015 – Forecast

Analysis and Recommendations:

The USD/CAD is trading at 1.2923 adding 11 points

as traders watch elections in Canada with little interest. Election results will have a noticeable impact on the currency as traders assess what the outcome means for Canada’s economy. The country has faced a significant decline in the performance of the energy sector this year, and a report from one major credit rating agency suggests the climate is only worsening for Canadian energy companies while oil and gas prices hold below US$50 a barrel.

According to the latest Forex strategy note from NBC’s Financial Markets Unit there is a list of reasons to be wary on the Canadian dollar’s prospects going forward:

• – The ongoing oil shock
• – A benign Bank of Canada
• – Prospect of a minority government being formed in the federal elections

Foreign investors remain skeptical about Canadian economic prospects for good reasons.

“There are still huge uncertainties with regards to the impacts of the oil shock not only in the present but also on the future outlook, e.g. via the observed collapse of investment spending,” say Stefan Marion at NBC.

Adding to the Canadian dollar’s woes are downside risks to the energy sector in light of further USD strength, the Iranian nuclear deal, and a weak global economy, all of which are negative for oil prices.

While the USD rally has certainly be halted we, and the majority of institutional forecasters we hear from, believe the rally will ultimately restart.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Tuesday, October 20, 2015

Government Bond Auctions

Date Time Country

Oct 19 10:00 Belgium Auctions OLOs

Oct 20 09:30 UK 2% 2025 Gilt auction

Oct 21 09:30 Germany Eur 4bn 0% Sep 2017 Schatz

Oct 21 14:30 Sweden Announces details of Bond on 28 Oct

Oct 22 09:03 Sweden Holds I/L bond auction

Oct 22 15:30 Italy Announces details of CTZ/BTPei on 27 Oct

Oct 22 17:00 US Holds 30-year TIPS auction